Issue Brief - The Commonwealth Fund

Issue Brief - The Commonwealth

October 2013 Issues in International Health Policy Early Benefit Assessment for Pharmaceuticals in Germany: Lessons for Policymakers Sophia Schlette and Rainer Hess The mission of TheCommonwealthFund is to promote a high performance health care system. TheFund carries out this mandate by supporting independent research on health care issues and making grants to improve health care practice and policy. Support for this research was provided by TheCommonwealthFund. The views presented here are those of the authors and not necessarily those of TheCommonwealthFund or its directors, officers, or staff. ABSTRACT: Since 2011, Germany’s Pharmaceutical Market Restructuring Act has mandated that all newly introduced drugs are subject to an assessment of their benefits in relation to a comparator, typically the current standard treatment. For drugs found to have some additional benefit, the manufacturer and the statutory health insurers negotiate a price. For drugs found to have no additional benefit, their price is set in reference to the price of the comparator. This new system is intended to reduce spending on expensive new drugs that are no more effective than existing treatments, while encouraging pharmaceutical companies to invest in innovative drugs that improve health outcomes. The German experience provides lessons for the United States, where comparative effectiveness research is publicly funded but public insurance programs are limited in their ability to use its findings to make coverage or pricing decisions. For more information about this study, please contact: Sophia Schlette, M.P.H. Health System Knowledge Management, Berlin sophia.schlette@gmail.com To learn more about new publications when they become available, visit the Fund’s website and register to receive email alerts. CommonwealthFund pub. 1711 Vol. 29 OVERVIEW In Germany, pharmaceutical manufacturers were until recently free to set prices for prescription medicines approved for coverage under the statutory health insurance system. However, in the face of rapidly increasing prices for brand-name drugs and prescribing behavior shifting towards expensive new drugs, Germany enacted legislation to fundamentally change the way of establishing the value of new drugs and using it as the basis for price negotiations. Pharmaceutical prices in Germany are high relative to most other wealthy nations, although they are not as high as they are in the United States. One recent analysis found that in 2010 drug prices in Germany were 5 percent lower than in the United States, but roughly double those found in Canada, Australia, and the United Kingdom (Exhibit 1). 1 Since 2011, the Pharmaceutical Market Restructuring Act has mandated that all newly introduced drugs are subject to an assessment of their benefits in